If you're a Lefty like us, the Democrats are not your friends

March 2010 Archives

March 2, 2010

Oh the pain! The pain!

"Some prices in the economy fluctuate all the time in the face of supply and demand; food and fuel are the obvious examples. Many prices, however, don’t fluctuate this way — they’re set by oligopolistic firms, or negotiated in long-term contracts, so they’re only revised at intervals ranging from months to years....

[B]ecause they aren’t revised very often, they’re set with future inflation in mind...

[W]e’d like to keep track of this sort of inflation inertia, both on the upside and on the downside — because just as embedded inflation is hard to get rid of, so is embedded deflation (ask the Japanese)."

I hasten to note that the dismal science, as practiced by our leading neoliberals, has no "real" price setting model -- just this smudgery, this metaphorical pataphysical mush.

"[O]nce expectations of, say, persistent 10 percent inflation have become “embedded” in the economy, it will take a major period of slack — years of high unemployment — to get that rate down."

"Oh the pain, the pain!" as a great space coward, shown up top, was wont to cry.

Fortunately, we don't need a model of how the system works, nor even face the pain of adjustment -- not if we sieze power and superimpose a system our Gosplan can easily construct and enforce. Enter the Lerner-Vickrey-Colander solution.

Say we wanted to control the prices of the health sector -- maybe keep 'em on track with the overall movement of the price level.

Simple: you cap the markup over non-sector inputs for all sector firms, by creating a sector-wide markup warrant market.

This essentially limits depreciation charges, wages, salaries, as well as profits -- i.e. the same value that is taxed by a value added tax. The two would work well together in a whole-system application of markup caps (MUC) if, say, the corporate income tax (CIT) was modified into a value added tax (VAT).

Prolly firms would get issued a flow of warrant "credits". If a firm wants to increase mark up above warranted levels, the firm has buy the warrants with cash on the warrant market.

All this formally parallels the carbon warrant notions, of course -- I hope without the wild croaks of dismay from the pwog pond.

By the way, you could use a Pigou tax here too -- that was also devised in the roaring 70's by Weintraub et al. I favor the cap and trade mechanism because it sets the inflation rate, leaving the markup cost to the vagaries of the market, whereas the Pigou tax sets the mark up cost, leaving the ultimate inflation rate uncertain.

Health care, of course, is quite a different application than carbon, where I reluctantly prefer the Pigou tax method.

Either approach would be a lot better than being bondservants of the anarchy of corporate-administered pricing -- especially as we face.up ahead, looming at us through the windshield, the dark side of price-expectational inertia -- DEFLATION!

As Paul K puts it:

"what these measures show [i.e. various metrics of "core inflation"] is an ongoing process of disinflation that could, in not too long, turn into outright deflation"

Paradise lost

"Leave aside whether you are liberal or conservative... It’s hard to dispute: Congress just got a lot more done in the 1950s, 1960s and 1970s than in the 1980s, 1990s and 2000s.

Why?

You hear many grand, sweeping explanations. Let’s try just one simple one.

Congress in the first period was controlled by a handful of committee chairmen, who owed their positions to seniority. The committees did their work in secret. Bills written in committee typically could not be amended on the floor of Congress. The institution was authoritarian, hierarchical, opaque. And stuff passed.

In the mid-1970s, Congress underwent a revolution. The power of the committee chairmen was broken. The number of subcommittees proliferated. The committees met in public. Amendments multiplied. Congress become more open, more egalitarian, more responsive. And stuff ceased to pass...

Once upon a time, members of Congress did their business mostly in secret. They struck quiet deals with each other. A Republican might support a Democratic labor measure in return for some discreet help with a farm bill.

Today, everything happens in the bright glare of sunshine, policed by hundreds of ideological interest groups. Deviate one step from the party line, and you are a traitor, a sell-out, an enemy."

The guy's amazing. From 1938 to 1964 this fine old seniority system essentially froze up "solid south", as they say, except when confronting anything foreign or colored they had a notion to terrorize bully or plain kill -- oh yeah, and subsidize huge piles of grown crap in every district in America and build big superhighways between 'em. That was about the sum of it for over 25 years.

"Son, we done our duty: we kept the flag flyin' and the darkies down."

Recuperation and the Thermidorian Style

Recuperation in the social sense, not physical healing, consists of institutions and institutional arrangements capturing radical tendencies, coopting them, and using them to reinforce their entrenchment. Sometimes there's a meliorist adaptive process accompanying that, with real benefits accruing to people who have had little or nothing to gain from an accommodating participation in the extant systems. It's progress, of a sort.

Hysterical reactionaries attack the adaptive process in a spectacular fashion; moral panic, corporate street theater and so forth. The more sober reactionaries set about undermining the fragile economic underpinnings of radical movements. Both attacks seem irrational to me. A dominant system that works at all in the provision of security can always offer significant incentives to people who weary of sacrifice and insecurity.

The strength of the reaction and the resources poured into it offers status, power and career opportunities for people adept at Thermidorian posturing, e.g. the cruise missile left and the notionally progressive useful idiots who posture and fume when the institutional security for their useful idiocy comes under attack.

The shallowness and opportunism of the posturing is wretched in its own right, but it's the recuperation that does the serious harm. An expansion of the bullying classes is hardly progress. To paraphrase, when the people are being beaten with a stick, they are not much happier if it's called a multi-cultural, proactively pro-diversity, ergonomically correct stick. And it's this, not philistinism or a desire to be a mini-Mencken, that forms the core of MJS's attacks on academia, the liberal media outlets, etc., when and where they serve as a havens for professional, extravagantly protected trivialization specialists. One could easily find room to disagree with his opinion on the academic fields and studies themselves, which many do, but for goodness' sake don't throw the essential core away. We must live for the day when the last wingnut billionaire can be strangled with the guts of the last tenured crackpot. Otherwise... the terrorists have won.

March 3, 2010

Whoops

The song remains the same

There are three vacant board seats to fill at the Fed, including the vice chairman's, now held by veteran stooge and lickspittle Donny Kohn, pictured above washing down... washing down... oh never mind, I'll spare Father Smiff's blushes.

Three seats out of 7 -- that's a big chunk of the central bank vote. Okay, so you got 5 regional chairman that get to vote too, every time, but... maybe the right sorta folks could start to turn that Wall Street shithouse around -- maybe openly and clearly dissent from the banker line.

Yikes, baby -- just think -- get some easy-money types in there and....

But alas -- who's said to be the boys Obama has sent out with the lamp of truth in search of these new spirits? You guessed it: Tim and Larry. Delightful, no?

"So now the question is, who will fill Kohn’s seat — and the other two empty seats on the Board of Governors? The Board is supposed to have seven members, and they matter because they have seven of the twelve seats on the Open Market Committee, which sets the fed funds rate. Business Week says that the search is being led by Tim Geithner and Larry Summers, and that the likely goal is to find people to back Bernanke...This confuses me for a few reasons"

Why, Jimmy? Why? What could possibly lead you or anyone else for that matter to expect anything different?

Here's Mr Kwak's undoubtedly bull's-eye query:
"Does this mean that Obama is going to appoint three centrists who follow the [recent] central banking orthodoxy of putting inflation control over economic growth, and who oppose tighter regulation of banks?"
Here's the answer:

YES!

But here's why I read Jimmy every day:

"I think the deification of the Fed chair in the past two decades has been a decidedly bad thing."

Is there a greater charm than the obvious truth when told with such innocent straightness?

We owe Ralph Nader and Cynthia McKinney an apology. They were right about Barack Obama. They were right about the corporate state. They had the courage of their convictions and they stood fast despite wholesale defections and ridicule by liberals and progressives.

... The timidity of the left exposes its cowardice, lack of a moral compass and mounting political impotence. The left stands for nothing. The damage Obama and the Democrats have done is immense. But the damage liberals do the longer they beg Obama and the Democrats for a few scraps is worse. It is time to walk out on the Democrats.

Well, welcome aboard, Chris. And I suppose Lerner is due some props for passing this along to his congregation of beautiful souls at Tikkun -- even though he did hedge it round with a laughable old-maidish flurry of disclaimers and caveats:

My recommending the article is not meant to be an endorsement of Chris’s position any more than our circulation of other articles is meant as an endorsement of them. (Tikkun and the Network of Spiritual Progressives are nonprofits that are legally bound to refrain from endorsing political candidates or political parties, though we can certainly engage in discussions about them.) ...

On the other hand, in the case of Chris Hedges, he says so much that is true and insightful that we don’t want to distance ourselves too far from his courageous stands,

The Rabbi doesn't want to "distance himself too far". Presumably he wants to distance himself just enough.

Apparently he misjudged his distance. One imagines a deluge of rancorous phone calls from apoplectic yentas of both sexes -- canceled subscriptions -- vivid Yiddish maledictions turning the air blue. The next day's dawn saw Lerner backing water so fast his oars were just an indistinct blur, like a hummingbird's wings:

Many of the specific failures highlighted by the article I sent out yesterday by Chris Hedges criticizing the performance of the Obama Administration are legitimate points. But the way Hedges's positions are stated, and the conclusions drawn from them are not the path of spiritual progressives, in my view.There was too much anger in his statement overshadowing our spiritual progressive commitment to compassion and a spirit of generosity toward others with whose politics we disagree. And not enough sympathy for the problems anyone would face trying to get elected as President and to repair the damage of the past 30 years....

Hedges' analysis and particularly the harsh way he expresses it leads to despair and to the "blame game" that has little usefulness in politics. Our difference here is partly the difference between two styles of prophetic leadership: one that rails against injustice, the other that moves beyond the legitimate outrage and seeks to find a way to change the reality.

Lerner apparently sees himself as an heir of the Hebrew prophets, but one wonders what Jeremiah or Hosea or Habakkuk would have made of this fretful, nattering, wistful wringing of the one hand upon the other. They might have agred with the voice that one of their later admirers heard on Patmos: οὕτως ὅτι χλιαρὸς εἶ, καὶ οὔτε ψυχρός οὔτε ζεστὸς, μέλλω σε ἐμέσαι ἐκ τοῦ στόματός μου: So then because thou art lukewarm, and neither cold nor hot, I will spue thee out of my mouth.

March 4, 2010

Okay, I'm an extremist. Shoot me.

Nobody's in favor of book-burning or anything, but there are words and phrases which, when you encounter them, tell you, or should tell you, "Read no further -- this is twaddle."

Among these expressions are "extremist", "progressive," and "spiritual."

"Progressive" is a word used by liberals who don't want to admit they're liberals, and "spiritual" is a word used by religious people who don't want to admit they're religious. ("Spiritual progressive" is therefore of course a quadrate term in pusillanimous euphemism.)

But of the three, "extremist" is perhaps the deadest giveaway. It's never used approvingly; and as criticism, what exactly does it mean, except that anything that's any distance from the dead center is ipso-facto bad?

These reflections were suggested by an item in Alternet, from the deeply concerned pen of one Mark Potok:

Right-Wing Rage: Hate Groups, Vigilantes and Conspiracists on the Verge of ViolenceThe radical right has caught fire, as broad-based anger over the past year has ignited an explosion of new extremist groups and activism across the nation.

The radical right caught fire last year, as broad-based populist anger at political, demographic and economic changes in America ignited an explosion of new extremist groups and activism across the nation.

Hate groups stayed at record levels -- almost 1,000 -- despite the total collapse of the second largest neo-Nazi group in America. Furious anti-immigrant vigilante groups soared by nearly 80 percent, adding some 136 new groups during 2009. And, most remarkably of all, so-called "Patriot" groups -- militias and other organizations that see the federal government as part of a plot to impose “one-world government” on liberty-loving Americans -- came roaring back after years out of the limelight.

The anger seething across the American political landscape -- over racial changes in the population, soaring public debt and the terrible economy, the bailouts of bankers and other elites, and an array of initiatives by the relatively liberal Obama Administration that are seen as "socialist" or even "fascist" -- goes beyond the radical right.

Wow! They're "on the verge" -- the very verge, itself! -- of, gasp, "violence"! Have you shit your pants yet? No? Well, don't lose a moment. Do it now, if you have a progressive bone in your body.

It's always been my view that actual violence is more of a problem than potential violence. Thus the daily actual violence at home and abroad practiced by the "relatively liberal" Obama administration agitates me a good deal more than the potential violence of some Teabagger crackpot. But then, I'm an extremist.

* * * * *

Mark Potok is the editor of something called the "Intelligence Report" of the Southern Poverty Law Center (SPLC). SPLC is a familiar name, but I know nothing about it. Anybody out there who's more au-fait than I am? "Intelligence Report" has a certain creepy Larouche-ite ring to it.

March 5, 2010

Incontinent Spiteful Dithering

Just like old times. The highly touted return of the rule of law must yield to exigent circumstances. Or maybe not. But it's still the Republicans' fault if and when the tortured terror suspects may or may not have to be tried in military kangaroo courts.

The Democrats' neurotic mockery of proceduralism is the dry, sadistic, technocratic version of the Republicans' sweaty, sadistic, technocratic mockery of proceduralism. Neither of them can produce anything remotely plausible as justice. Order is out of reach for them both, because they have no idea what it is. So...

Why not simply murder them? Cut through the dithering! Murder is sufficiently spiteful, and surely there's room in the president's "Just War" theory for a murder or four. He could authorize a predator drone if that would sit better with the focus groups.

March 6, 2010

The Dorks of Death

“It’s the Americans,” said Gen. Mohamed Gelle Kahiye, the new chief of Somalia’s military, who said he recently shared plans about coming military operations with American advisers. “They’re helping us.”

That American assistance could be crucial to the effort by Somalia’s government to finally reassert its control over the capital and bring a semblance of order to a country that has been steeped in anarchy for two decades. For the Americans, it is part of a counterterrorism strategy to deny a haven to Al Qaeda, which has found sanctuary for years in Somalia’s chaos and has helped turn this country into a magnet for jihadists from around the world.

Something I recall from early exposure to radical, not "free alterations", feminism is the effect of a patriarchal culture on the males. There's inevitably a proliferation of socially retarded, deeply angry, power-hungry dorks who will never get anywhere near real power. They have to content themselves with proximity to it. The more cruelly stunted waste their days on witless, technocratic exegesis and apologetics for their bosses' idiot hegemony schemes. They're as completely infantilized as their superiors, whose distinguishing characteristics are ambition and a greater indifference to other people's suffering.

Capitalism produces an endless supply of this intellectual cannon fodder and the Democrats are second to none in their mastery of the mindset. It's probably best to consider the Republicans the acting-out version of the ideal product.

March 7, 2010

Hodge shall not be shot(*)

The executive council of the AFL-CIA, backing its charging fearless leader Ferdinand Trumka, has issued a 5-point jobs plan -- and as far as Knothole Paine here is concerned, at least one of the points sucks hot rivets.

Here's all 5. Can you pick out the banjo? Hint: it's not even number 5:

Extending current federal supplemental unemployment benefits programs to prevent a downward spiral as families fall into bankruptcy and lose their health care and their homes to foreclosure.

Investing the money to meet the $2.2 trillion in unmet infrastructure needs, while including prevailing wage protections and strong Buy America provisions.

Helping state and local governments meet pressing needs to overcome an estimated $180 billion shortfall in the fiscal year 2011 and $588 billion over the next four years.

Putting people back to work doing work that needs to be done by preserving good public jobs that provide vital services and capacity for building strong communities. In addition, expansion of vital services in targeted areas can reduce unemployment and provide infrastructure for economic growth.

Easing the credit crunch for small-and medium-sized businesses by establishing a fund to lend TARP money to small-and medium-sized businesses at commercial rates, managed by the community banks left out of the Wall Street bailout, with the banks taking first-dollar risk

Yup, number 2! Precisely because it oughta stop with "needs". The bit about "including prevailing wage protections" is just the sort of special hard-hat handout that alienated the broad mass of the job force from these blue collar kulaks -- and it's also what motivates the "strong Buy America provisions", though I can live with that for quite diffrent reasons than union job protection.

For that matter, point 3 looks like special consideration horseshit, too. God, I hate public-sector unions as currently constituted, almost as much as the construction trades crowd, the perennial establishment butt boys of the "movement".

Ahh, but I say too much, don't I. Where's my party muzzle when I need it? Oh yeah, we're in 'post-party' times here in America, and how awful that is, especially for big-mouth egg drops like me, here at the SMBIVA bugle.

Father Smiff allows too wide a range of flourishes to this reckless irresolute copperhead.

------------------

(*) I never shall forget the indulgence with which [Johnson] treated Hodge, his cat: for whom he himself used to go out and buy oysters, lest the servants having that trouble should take a dislike to the poor creature....

This reminds me of the ludicrous account which he gave Mr. Langton, of the despicable state of a young Gentleman of good family. 'Sir, when I heard of him last, he was running about town shooting cats.' And then in a sort of kindly reverie, he bethought himself of his own favourite cat, and said, 'But Hodge shan't be shot; no, no, Hodge shall not be shot.'

Links wanted

Okay, it's time I put together a links page on this site. I'm soliciting nominations. Leave suggestions in a comment or send email -- stopmebeforeivoteagain {at} yahoo.com. I'd be especially interested in hearing about sites that link to us.

March 8, 2010

Let's hear it for the Vikings

LONDON -- Icelanders this weekend resoundingly rejected a plan to reimburse overseas depositors after the failure of an online Icelandic bank, a rare public referendum on the repayment of a foreign liability that could fuel further concerns over debt problems in Europe.

A whopping 93 percent of Icelanders rebuffed a government push to reimburse Britain and the Netherlands $5.3 billion....

Voters reveled in a carnival atmosphere following the vote, shooting fireworks into the air and raising placards saying "Sorry Darling, No Deal" -- a reference to Britain's Alistair Darling, the finance minister....

Darling conceded on Sunday that it could now take "many, many years" before London would see any reimbursement. But he also seemed to strike a conciliatory note, saying both Britain and the Netherlands are willing to be flexible.

Oh, they're willing to be flexible now, are they? Reminds me of the story about Carlyle -- Margaret Fuller is supposed to have said to him, with what airy grandiosity one can easily imagine, "Mr Carlyle, I have decided to accept the universe." Carlyle responded, "Egad, madam, you'd better!"

It's always been head-for-the-hills time in northwest Europe when the Vikings find themselves seized by a "carnival atmosphere".

I happened to be living in Ireland during one of the intermittent "cod wars" between the Icelanders and the Brits. It would have done your heart good to hear the Irish cheering on the Icelanders -- all those unfortunate misunderstandings with Thorgest et al. quite forgotten.

According to a story I heard several times there -- though I've never been able to confirm it -- there was at least one occasion when an Icelandic gunboat loaded up its guns with potatoes and broadsided an English vessel. Talk about bangers and mash! The characteristic Irish narrative genius brought vividly to the mind's eye an image of the Brit warship and its spiffy officers slathered inches-thick with potato puree, flavored with a soupcon of cordite.

Lames to the slaughter

"Caught in a surge of antigovernment sentiment, [Arkansas senator] Lincoln has been blasted by conservatives for allowing health care legislation to proceed, and has already attracted a slate of potential Republican challengers. At the same time, in a state with a more centrist tradition than most others in the South, she has become a target of the left for opposing a government-run public health care option, easier organizing rules for unions and regulation to fight global warming.

Not only do polls show her behind several of the Republicans, she now also faces a challenger in the May 18 Democratic primary, Lt. Gov. Bill Halter... The Sierra Club is running radio advertisements against Mrs. Lincoln and even Emily’s List, which raises money for the election of Democratic women who support abortion rights, joined the pile-on last week, reminding followers that it stopped supporting Mrs. Lincoln, who is generally a supporter of abortion rights, after she voted to ban a form of late-term abortion in 1999."

Bright spots?

"Mrs. Lincoln retains the support of... former President Bill Clinton and Wesley K. Clark, the retired Army general."

Nice to see this limited-liability board-room beeyotch getting the heat these days, but who in the Sam Hell is her pwog-side primary contest tormentor, Bill Halter? Rhodes Scholar, Clinton-appointed federal bureaucrat... and get a load of the chiaroscuro of those Nixonian jowls; what a promising cove, eh?

His endorsers:

"Calling Mr. Halter “a true progressive,” MoveOn.org and other liberal groups quickly raised $1.1 million for him... four unions pledged to spend $1 million each to help him win.The Sierra Club is running radio advertisements against Mrs. Lincoln and even Emily’s List, which raises money for the election of Democratic women who support abortion rights, joined the pile-on."

The Pwog Panzers are really rolling here. Four whole unions?... Wow, this guy must be well to the left of Vermont Maid Bernie Sanders.

Can we at least hope the seat goes red-meat Republican come fall? Not that that would be any improvement; but it would provide a salutary blend of justice and entertainment, something we don't see much of any more, now that public hangings have fallen into disfavor.

Gremlin strikes again

March 10, 2010

We knew him when

Congressman Eric Massa is not going quietly, is he? He's been a favorite here since my visit to the Daily Kos convention back in '06.

His supposed "inappropriate" behavior -- don't you hate that term? -- doesn't seem to have amounted to much, unless there's juicier stuff to come. But all right-minded people are agreed that it's a lunatic "conspiracy theory" -- don't you hate that term? -- to imagine that the Dems might have greased the skids for him.

March 11, 2010

Thermidor en Ventose

March is Independent Fed month!

This month back in '51, the blatantly bright-eyed anal-looking briefcase thief pictured above freed our Fed from the Truman treasury department, after 9 harrowing years of institutional captivity, just as many of our brave boys in Korea were entering Chicom captivity.

Clio takes with one hand as she gives with the other, no?

At any rate, brainwashing seems to work in both directions. Here's one way -- the classical way, the Red Menace way. Before washing:

After washing:

And here's another way -- the Fed's freedom-to-turkeyrope way. Before washing:

After washing:

To read about this glorious silk-hat liberation struggle, maybe start here. In brief: the Fed had its policy rate ceilinged, for nearly a decade, at a level often well below inflation. The clamp was placed originally in 42-43 just as Uncle, resorting to extraordinary measures, exploded his deficits to win the war.

With help like this pinned rate, obviously the size of our war-induced federal paper debt mountain shrank nicely, as the postwar years of stiff -- in part, wage-driven -- price level updrafts roared away.

Paradigm a dozen

The advisory board is worth a look: what a criminal-looking bunch, every man jack of 'em wearing an expression that's either brittlely brazen or shifty-eyed and hang-dog. These are the motley Merlins that George Attaturk Soros has assembled to redesign the global economic system; and here is a quote from his highness, lord Soros, that serves as well as any might to seed the ground with dragon's teeth:

"The entire edifice of global financial markets has been erected on the false premise that markets can be left to their own devices, we must find a new paradigm to rebuild from the ground up."

Imagine! A "new paradigm" -- built out of gopherwood memes, no doubt, by these marvelous mind machines. C'mon, Mistah Shuman, ark's a-waitin' -- to transport, not just a few, but all of us, to the new, well-guberned shark feast called market Earth, version 2.0.

Paine in love

There is something all too twisted in me. Take my new heartthrob, the rather aquiline Catherine Rampell. I find her as entrancing as a glass case full of birthday cakes, and she works for Father Smiff's NYT, no less -- in fact, she edits their online econ-con efforts, and writes stuff too, like this, f'rinstance:

"Rather than obsessing over Washington’s rubbery backbones, perhaps we should find ways to align the interests of the country with those of the politicians who are guiding it. Put another way, how can we get politicians elected on a short-term basis to think about the long-term good of the country?...

Historically, fiscal crises have followed financial crises [yup, like the one we just had], so now is probably the time to start planning.... It has been difficult to spook Americans too much because it has been so blissfully long since we had a budget crisis; the last time the government technically defaulted on its debt was during the Great Depression.

Alas, we don’t have a color-coded alert system to warn us about our fiscal condition.

We do, however, have credit rating agencies. Moody’s recently warned that it might downgrade America’s top-notch sovereign credit rating, which could alarm the markets and eventually make it harder for the government to borrow. Once upon a time it seemed we needed the government to save the financial markets; perhaps now it is the financial markets that will keep the government in line."

Pardon me while I swoon in a puddle of thwarted desire and enraged masochism.

"The question of why so many Jews have been so good at making money is a touchy one...From Aristotle through the Renaissance (and then again in the 19th century, thanks to that Jew-baiting former Jew Karl Marx), thinkers believed that money should be considered sterile, a mere means of exchange incapable of producing additional value. Only labor could be truly productive, it was thought, and anyone who extracted money from money alone — that is, through interest — must surely be a parasite, or at the very least a fraud...

Lending at interest was thus forbidden across Christian Europe — for Christians. Jews, however, were permitted by the Roman Catholic Church to charge interest; since they were going to hell anyway, why not let them help growing economies function more efficiently? (According to Halakha, or Jewish law, Jews were not allowed to charge interest to one another, just to gentiles.)...

The exorbitant interest rates they charged — sometimes as high as 60 percent — only fed the fury. But considering the economic climate, such rates probably made good business sense: capital was scarce, and lenders frequently risked having their debtors’ obligations canceled or their own assets arbitrarily seized by the crown...

This early, semi-exclusive exposure to finance, coupled with a culture that valued literacy, abstract thinking, trade and specialization (the Babylonian Talmud amazingly presaged Adam Smith’s paradigmatic pin factory), gave Jews the human capital necessary to succeed in modern capitalism. It also helped that Judaism, unlike many strains of Christianity, did not consider poverty particularly ennobling...

For centuries, poverty, paranoia and financial illiteracy have combined into a dangerous brew — one that has made economic virtuosity look suspiciously like social vice, [inspiring] resentment among history’s economic also-rans."

... And she went to Andover and Princeton and grew up in South Florida -- as she sez, "the New York part".

March 13, 2010

Hollywood supports the war effort

The film’s director, Kathryn Bigelow, said at the end of her acceptance speech, “I'd like to dedicate this to the women and men in the military who risk their lives on a daily basis in Iraq and Afghanistan and around the world and may they come home safe.”

...I haven’t seen The Hurt Locker and don’t plan to.... “We had these Blackwater guys that were working with us in the Middle East and they taught us like tactical maneuvers and stuff – how to just basically position yourself and move with a gun,” Hurt Locker actor Anthony Mackie told the New York Times’ Melena Ryzik. “We were shooting in Palestinian refugee camps. We were shooting in some pretty hard places. It wasn't like we were without enemies. There were people there looking at us, 'cuz we were three guys in American military suits runnin' around with guns. It was nothing easy about it. It was always a compromising situation.”

That quote makes me wish Mackie had some real enemies, enemies in a position to do him substantial, perhaps definitive harm.

I love Alex for breezily dismissing a movie he hasn't seen. You can tell a book by its cover, I've always said, and all you really need to know about a movie is how people respond to it. I am not being ironical here. Reception is not just the main thing, it's the only thing.

I personally made this discovery years ago, in connection with the movie The Deer Hunter, which I still haven't seen. I found that all I had to do was get people to tell me what they liked about the movie, and I had plenty of grist for my mill. Sentimentality is chief lady-in-waiting to militarism -- sloppily weeping and waving her sodden handkerchief as Moloch marches off to the fields of slaughter.

Sentimentality also gets to have it both ways. IMDB has an unsourced quote supposedly from director Kathryn Bigelow:

I'm thinking of the war and I think it's a deplorable situation. [Movies are] a great medium in which to speak about that. This is a war [i.e. Afghanistan] that cannot be won, why are we sending troops over there? Well, the only medium I have, the only opportunity I have, is to use film. There will always be issues I care about.

War is a "deplorable situation" but hey, there's Oscar gold in them thar corpses. And corpses in that Oscar -- bet you anything this is a movie that sends a fresh crop of impressionable kids off to the recruiting stations.

Hellene, and mean

Simon Johnson -- shown above, looking a bit like Bob Newhart -- has had his manic anti-Laputa moments lately. But it seems, come the ultimo pinch -- once a guy's spent some quality time trawling the watery byways of the planet for the IMF in full B and D mode... well, you know... ya just can't take the bonecrusher out of 'em.

"By the end of 2011 Greece’s debt will reach around 150% of GDP... About 80 percent of this debt is foreign owned, and a large part of this is thought held by residents of France and Germany."

So? Here's the kill shot:

" Every 1 percentage point rise in interest rates means Greece needs to send an additional 1.2 percent of GDP abroad to those bondholders."

Comes now the "what if" permutation arcade:

"What if Greek interest rates rise to, say, 10% – a modest premium for a country which has the highest external public debt/GDP ratio in the world, which continues (under the so-called “austerity” program) to refinance even the interest on that debt without actually paying a centime out of its own pocket, and which is struggling to establish any sustained backing from the rest of Europe?"

Note the piling-on of rhetorical florishes there -- not just blatant signs of bad faith but downright untruths(*). To continue:

"..Greece would need to send a total of 12% of GDP abroad per year, once they rollover the existing stock of debt to these new rates (nearly half of Greek debt will roll over within 3 years).

This is simply impossible and unheard of for any long period of history. German reparation payments were 2.4 percent of GNP during 1925-32, and in the years immediately after 1982, the net transfer of resources from Latin America was 3.5 percent of GDP (a fifth of its export earnings). Neither of these were good experiences."

As if that's not enough:

"On top of all this Greece’s debt, even under the IMF’s mild assumptions, is on a non-convergent path even with the perceived “austerity” measures."

These "numbers" can get a signifigantly opposite play. Enter St Paul of Nassau:
"In the past, some countries have managed levels of debt that high or higher, without default...So how is that possible?

Suppose that Greece had as much credibility as Germany, and could borrow at a real interest rate of 2 percent. Then stabilizing the real value of its debt, even with a debt ratio of 150 percent, would require a primary surplus of only 3 percent of GDP. That’s certainly possible for some countries, although maybe not for Greece... this suggests that optimism or pessimism about future default can, to at least some degree, be a self-fulfilling prophecy."
As if to scotch Johnson's own bitter prophecy, the Euro barons are making nice about Athens -- err, not Byronic nice; more like "them's pets of the realm" nice.

In any case these numbers are far from horrorific in absolute terms. Imagine, say, South Carolina in fiscal trouble. Could the rest of the states bail her out through the grand offices of Uncle Sap?

"Soitenly!" as "Curly" Krugman pointed out some time ago: "Overall, the group of stressed economies account for about 20 percent of the eurozone’s GDP", Krug observes -- less of a hard slog than, say, if Uncle were to bail out Dixie (though we have to put Spain aside as TBTF).

Hell, it gets to be a damn fine boat ride. If the Euro central bank can borrow at sub German rates, then...

But alas, mates, a greater fraud is in progress here, perpetrated upon a lesser fraud, and in the end 'twill all prove just another silk-hat squeeze play, a starve-the-little-critters gambit, a nifty iron-law flimflam, a way to crumple the welfare state just a tad more, foul its safety nets and crimp its feckless hu-cap squanderings. "They're in a pickle, boys, so let's squelch 'em and squelch 'em gooood!..."

(*) The rates on Greek sovereign debt -- as a mere fly speck out of the global total -- could be easily kept down by simple purchases on the open market by the European central bank. This fantasy of ballooning rates leading to a cascade of attacks on other weak sister sovereigns is as unnecessary as the fear of, of... the fear of wet hair when you're about to leave a hat shop in a rainstorm.

As to this straight-from-scratch bullshit --

"[10%] is a modest premium for a country
which has the highest external public debt/GDP ratio in the world"

-- this alleged modest premium is in fact huge by OECD standards.

And as for Greece the debt king -- why, the chaps have a smaller GDP to debt ratio than Japan, among others.

March 16, 2010

Bankster Bukkake

I'm almost embarrassed for John Cassidy, but the loathsome spectacle he's joined puts him well past any such concern.

The big banks remain able to open their doors only because Geithner and Bernanke keep them on life support. They are not healthy. They are not solvent. They are utterly dependent on the heroic book fiddling of the Fed's and Treasury's yuppie Stakhanovites. What's more, they're still playing the same games that got them into code orange panic. Only the most severely delusional pretend otherwise. Even the banksters aren't kidding themselves, and that really says something. Cassidy's adulation—oh the sordidness of it all!— Tim Geithner... It might be possible to find someone more loathsome, but I honestly have no idea where to begin looking.

Strangle the last prof with the entrails of the last dean

It's getting to be less fun trying to discredit the Democratic Party these days; the party is doing such a terrific job of self-discreditation that any additional contribution from this 'umble blog seems, well, supererogatory. So I find myself returning more and more to another unpublishable book(*), this one an attack on the credentialling sector, CS for short.

I personally have a fondness for dead languages, and so I subscribe to an email list for people interested in ancient Greek and Latin. Not surprisingly, a good many fellow-subscribers are either inmates or screws in the CS.

Now every mailing list has its recurring obsessions -- monsoons that blow in every couple of months or so and drench everything in sight with torrents of platitude.
For bicyclists, it's helmets. For harpsichordists, it's temperament (the musical kind, not the characterological). For classicists, it's The Usefulness Of The Classics.

This Ixion's wheel of tedium got its latest spin from a ponderous Colonel-Blimpish column in the Telegraph, written by the entertaining Tory buffoon Boris Johnson, shown below after an appearance at the Westminster Kennel Club dog show. (He was entered as a Pomeranian, a region from which some of his oddly-assorted ancestors are said to originate.)

Excerpt:
"The reason we should boost the study of Latin and Greek is that they
are the key to a phenomenal and unsurpassed treasury of literature
and history and philosophy, and we cannot possibly understand our
modern world unless we understand the ancient world that made us all."

One often hears this trope(**) -- indeed, it occupies, or should occupy, a prominent place in the Catechism of Cliche -- but what reason is there to believe it's true? Do people who have studied the classics really understand the modern world better than people who have not? In my experience, it's the reverse, if anything.

All the various arguments for the utility of classical studies -- understanding the modern world, stretching the mental muscles, etc. -- strike me as both implausible, and unappealing even if they were plausible.

On the other hand, perhaps I'm just a self-indulgent sybarite, but pleasure seems to me like a good reason to do something. To paraphrase Dr Johnson -- a more penetrating Tory Johnson than Boris -- there are only two reasons to study anything: emolument and delight. Classics are not exactly the high road to emolument, but for people wired a certain way, they can be a considerable source of delight.

Delight, however, is the last thing the credentialling sector boffins would think of offering. Perhaps they know their own limitations; but no, I don't think so. What they're articulating here is something that goes deeper.

Somebody once observed of the Puritans that they disliked bear-baiting not because it gave pain to the bear, but because it gave pleasure to the spectators. In this respect the Puritans sounded a motif that the rising petit-bourgeoisie was to make very much its leit-. Even my louche and dissolute generation, who would remember the Sixties with great pleasure if they could remember, have returned to bourgeois form on this point. Pleasure -- idle pleasure -- wasted time -- is deeply suspect; everything has to have some utility -- every investment of time or effort has to show a return. Even vacations get filed under some such rubric as "recharging the batteries", so that the striver can come back with redoubled zeal to his weary corporate climb, and more than make good the time he lost on the ski slopes. And this constituency of instrumental-reasoners is, naturally, the demo that the Unis are marketing to.

But of course, the argument from utility is transparently bogus when it comes to Classics, and that's why academic Classics are doomed.

A good thing, too. My Greek is pathetic and my Latin hardly better, but I really think the old boys in the chitons and togas would be in better hands if they were tended by amateurs -- even amateurs like me. Hell, if present employment trends continue, I'll be in an excellent position soon to improve my Greek.

There's an old humorous verse, which I'm probably misremembering --

The legacies of history
Are left to strange police --
Professors in New England guard
The glory that was Greece.

But the blight is no longer confined to New England, and every state Uni in this fair land can show a stalwart half-dozen or so slavies busting their hump trying to get some use out of Virgil or Thucydides, and V&T fighting a very effective rear-guard action, leaving punji pits and IEDs at every bend in the road.

When the regents finally ax these poor devils and I meet them on the bread line, I'll give 'em a cheerful Ave (or Χαίρε) and propose a reading group, whose only rule will be a firm commitment to unproductive pleasure.

--------------------

(*) Working title: The Hell With Merit.

(**) Though seldom so vulgarly phrased. "Boost," forsooth! And what does this great classicist think "phenomenal" means?

No more teacher's dirty looks

...public controversy seeks to dislodge teachers' unions: the right-wing trashes teachers’ unions outright, while the “liberal” media takes a more subtle, sophisticated approach, blaming the state of public education on “bad teachers” ....The bi-partisan goal is to undermine and dismember public education....

... as public education is gutted, rich investors parasitically benefit from it by opening for-profit “charter schools,” curriculum corporations, [etc.]

Shango goes on to trace our future if this orgy of union-busting proceeds as planned by Obummer, Incorporated:

If teachers’ unions cannot keep schools open, or teachers from being fired... If any teacher can be fired when they are labeled “bad,” then one of the fundamental concepts of unionism, seniority, is crushed.... The struggle of the teachers is thus the struggle of all union workers. But unions benefit more than just union workers.

Shango's prescribed counterattack:

Taxing the rich and corporations must be the rallying call for the entire public sector workforce, which remains the bedrock of American labor.

Sounds pretty good, up to the business about public-sector (PS) unions as "the bedrock of American labor". In fact the rise of PS unionism has coincided with the decline of private-sector unionism, and I don't think that's a coincidence.

Can post-industrial American unionism be all about schools, libraries, hospitals, and nursing homes? I sure hope not.

Once you add in those sectors that are quasi-public, PS unions have joined the blue-ribbon contruction kulaks in dominating the movement. And they're Dembo barnacles to a man. They typify political-machine shakedown unionism -- the very nexus, so effectively targeted by rage radio, of do-little and care-less parasitism. We got ours, and know what? You can go to hell if you don't like it.

To the unorganized, un-connected mass of badly jobbled citizenry, these rackets can look as much like gangsterism in uniform as the Brownshirts. The bastards are giving unionism a bad rap.

Okay, okay, it gets complicated. One thinks of the last pair of serious transit actions in NYC and Phili. Tactics need sharpening here, and the corporate media certainly can twist a plea for fairness into a screw job and a holdup. But as a Woodstocker I first think of the goddam police "unions", and that other working-class hero scam, the firemen.

As to their plainclothes cousins, one notes the teacher outfits... say the NYC UFT under Shanker.

Of course none of this in itself is fatal to union expansion, but letting these apes run the federations and the councils can cripple organizing in tougher sectors where the unions face bottom-line alley cats, not tax-based puddy tats.

The union movement needs to self-reconstruct, right?

If its long slide is to reverse itself, a new organizing paradigm is needed -- as big as the protracted antagonistic transition from trade to industrial unionism that culminated in the birth of the CIO -- to organize the vast privately owned and operated low wage corporate service and commercial sectors: the restaurants, the hotels, the retail stores, the cleaning services, the delivery and warehouse networks and so on.

Yes, the health sector has been a partial success, largely because inside-baseball unionism works, and even sustains itself in a hostile sea of anti-unionism, wherever gubmint money flows into payrolls. The locus classicus is construction, where all the Davis-Bacon Act rig jobs allowed the rise of the hardhat kulakery and created reactionary Meany-streak unionism back in the 'Nam days.

Even if Meany and his ilk are now long since members in that final union beyond, down here the culture of unionism is still entirely based on inside deals, i.e. ways to carve up added surplus extracted from a passive, nearly prostrate fee- and tax-paying public.

That's not the model of a "progressive" union, which would be a market-restricted shift in value-added shares between corporates and their job force. Rather, the PS unions' model is a surplus upcharge instead of a takeback. Instead of shifting the shares of value-added between labor and the corporations, public unionism is all about locating possible new sources of capturable surplus -- what the econ-cons call drilling for rent -- or better, collaborating in the erection of ever-new tollgates to scim-scam more of the innocent public's money

Education, of course, is the gold-standard horrible example, but health care is right u there too -- may even be the ultimo mishmash of irrational arbitrary taxing disguised as pricing.

But I come to save unionism, not to bury it.

I hope to live to see the union movement, that loveable old much-battered pug, rising majestically from his stool like old Laertes, his strength miraculously restored by the gods of class war, ready for the next big round.

March 18, 2010

Dennis, no menace

Okay, confession time. I've always had a sneaking fondness for Dennis Kucinich, ever since his madcap days as the boy mayor of Cleveland, when he made the "business community" so hot under the collar that they started to exhibit random quantum effects, winking in and out of existence and leaving half-dead cats strewn in the streets.

Oh, I always knew better. I mean, the guy's a Democrat. Doesn't even try to hide it. But I couldn't help myself. It was my dirty secret.

So it's a relief to see the "maverick" neatly lasso'd by Rahm Emanuel & Co., and meekly proclaiming his support for the Great Insurance Company Pig Trough, aka "health reform":

Mr. Kucinich said he would keep working for a government-financed single-payer health care system. But after coming under intense pressure, which included a visit to his district on Monday by Mr. Obama, Mr. Kucinich said he did not want his objections to stand in the way of the legislation.

“If my vote is to be counted, let it count now for passage of the bill, hopefully in the direction of comprehensive health care reform,” Mr. Kucinich said.... “We have to be very careful that the potential of President Obama’s presidency not be destroyed by this debate.”

Perfect, huh? The "potential" of the Obama administration. At need, Dennis will give you a pony IOU as readily as any other soup-hound in his "party".

I was so cheered by this gratifying news, so glad to have this discreditable little monkey off my back, that I felt up to a quick tour through the pwoggo blovosphere. Here's a representative take from Kos -- literally the first post on this subject that my eyes lit upon in the orange bog:

Kucinich and ... Michael Moore have, by their own words, taken one for the president.... both plainly say it should be passed because of their desire to see President Obama's presidency succeed....

Try to let that sink in. They want the right-wing attempts to delegitimize [Obie] to fail. They do not think this bill is real reform (the word "detest" comes into play), but will support it anyways. I respect both men and absolutely take them at their own words.

Kucinich conceded that he decided to swallow the bill because failure would be a threat to Obama’s overall agenda. Moore said, "Pass it because, if President Obama takes a fall on this one, I don't know if he'll be able to get back up. And then NOTHING will get done. We can't have that."

Much material for reflection here. Of course the first thing that comes to my mind is C Wright Mills' astute observation about crackpot realists, much-quoted hereabouts. We might paraphrase MIlls slightly and say that hard-line dead-end Democrat fanboyz like Moore and our Kosnik still believe that Obama's "success" means something, though they don't know or can't admit what it means -- which is, of course, endless war, panoptic security-state totalitarianism, further immiseration for the general public and further illucration for the already obscenely wealthy few.

A gloomy picture. But there are some grace notes of low comedy that you can always rely on; like the preposterous macho rhetoric these Dembo weenies love so much, which becomes ever more more purple in direct proportion to the hapless abjection and cringing slavishness of their politics. "Take one for the president," forsooth!

Happy St Patrick's day

Smartass pleb defiance, or just the usual positioning for a buttfuck? You decide...

Yer man Carolan O'Marx (the da) observes somewhere that the Irish often get the chance to prove just how far a people can go to debase themselves. Of course, the good doctor was thinking of the then recently passed great and glorious famine.

Much since has troubled and tasked those verdant superstition-cursed but matchlessly-eloquent islanders. The latest hammering seems to include an extra-special dose of nasty: a banker bedlam turned servile sovereign bailout, and one so wild it may well be without parallel on the planet.

After the Irish lot bubble burst, at a level well beyond the American regional standard -- on the order of 50% from the top of the market to the bottom! -- the economy contracted monstrously. Unemployment soared. Pay packets were slashed. Misery saddled up its dark horse and galloped throughout the land. I'll let global visionary and indignant half-twit Simon Johnson take up the telling here, in an essay with the disquieting title, "Could the US become another Ireland?":

"Ireland's three main banks built up 2.5 times the GDP in loans and investments by 2008;... The banks got the upside and then came the global crash... Today roughly 1/3 of the loans on the balance sheets of banks are non-performing or “under surveillance”; that’s an astonishing 80 percent of GDP, in terms of potentially bad debts.

The government responded... They guaranteed all the liabilities of banks and then began injecting government funds. The government is now starting a new phase – it is planning to buy the most worthless assets from banks and pay them government bonds in return. Ministers have also promised to recapitalize banks than need more capital. The ultimate result of this exercise is obvious: one way or another, the government will have converted the liabilities of private banks into debts of the sovereign (i.e., Irish taxpayers)."

But wait! There's more!

"Ireland, until 2009, seemed like a fiscally prudent nation. Successive governments had paid down the national debt to such an extent that total debt to GDP was only 25% at end 2008 – among industrialized countries, this was one of the lowest.

But the Irish state was also carrying a large off-balance sheet liability, in the form of three huge banks that were seriously out of control.

When the crash came, the scale and nature of the bank bailouts meant that all this changed....The government has cut takehome pay of public sector workers by roughly 20% since 2008 through lower wages, higher taxes, and increased pension payments...Even with their now famous public wage cuts, the government budget deficit will be an eye-popping 12.5% of GDP in 2010...they still plan further major expenditure cutting and revenue increasing measures each year until 2013, in order to bring the deficit back to 3% of GDP by that date. The latest round of bank bailouts (swapping bad debts for government bonds) dramatically exacerbates the fiscal problem. The government will in essence be issuing 1/3 of GDP in government debts for distressed bank assets which may have no intrinsic value. The government debt/GDP ratio of Ireland will be over 100% by end 2011 once we include this debt."

Judgement:

"Ireland had more prudent choices. They could have avoided taking on private bank debts..."

"You have to talk the talk and walk the walk,... send a clear message to the market about how you are going to correct the problem and then deliver."

Corrigan is CEO of an outfit calling itself the 'National Treasury Management Agency',
which seems to be the Fanny Mae-like designated manager of the "sovereign portfolio" of the Irish people, and at the present moment 'tis its solemn task to swap the swaps here -- private bankers' worthless trash for full faith and credit public bonds.

Oh lord above, please, I beg you, help the long-suffering people of Ireland, that Red Sox among the nations. Stretch forth thy mighty hand and stir them up to rebellion. Turn 'em into Vikings. Strengthen them to spit back these crooked obligations their gubmint has forced 'em to swallow. Visit thy wrath and indignation upon their gubmint for underwriting all these failed plunderings of their very own pirate pack of Shylock fraudsters, whilst at one and the same time slashing everything in sight. Yea verily, they do out-Hoover Hoover!

Ahh now, calm down Owen me lad, calm down. After all don't it just go to show ya an antique Emerald truth: when a "sovereign" lobby owns an Irish gubmint, it really owns 'em, all the way down to their heels. The buy is never partial or renegotiable. An Irish gombeen gummint can be trusted to walk the walk, as the man sez -- right off the plank.

Americans overwhelmingly favor guaranteeing coverage to those with pre-existing conditions...To make insurance affordable, you have to keep currently healthy people in the risk pool, which means requiring that everyone or almost everyone buy coverage... You can’t do that without financial aid to lower-income Americans so that they can pay the premiums...

You end up with a tripartite policy: elimination of medical discrimination, mandated coverage, and premium subsidies."

Do that sound watertight to you, my fellow taxpayers? Not to me, not by a long shot. As my ever so benignly vicious pop -- god rest his facetious soul -- was wont to add: "and the price tag?"

Here's the cost arch versus the status quo arch, according to Krug -- per CBO 'findings':

"the proposed legislation would reduce the deficit by $138 billion in its first decade... [$14 billion on average per year -- peanuts, anyone?] ...and half of 1 percent of G.D.P., amounting to around $1.2 trillion, in its second decade."

Showing us a full twenty-year arch -- that's reaching for it, no? Must be necessary to get at those serious reductions out there in years 18 through 20.

To put this in perspective one needs a few more embedded number assumptions. The health sector is currently gaining GDP share. The numbers look something like this: the difference between general inflation and health sector inflation per annum revolves around 5% -- 8% health-sector vs. 3% over all. So the rest of the economy is inflating at a little over 2%.

Watch Mr Fright Graph climb!

The health sector share is now 15% of GDP. But if the health sector is inflating at 7-8% a year -- doubling every 10 years or so -- then as the sector grows as a share of GDP it would "pull" the overall inflation rate up towards itself. For example, if the health sector share gets to be 1/3, then the inflation rate of rest of the economy would only "out weigh" it by two to one, instead of today's six to one. At that point, with an 8% health sector inflation rate, to keep the overall rate down to 3%, the rest of the econmy would have to inflate at less then 1%. Yikes, that's the verge of the infamous deflationary trap!

Where does that put this bill's cost control measures?

If we stick to the bill's projected outcome -- twenty years or so to close the rate gap -- is that really bending the cost curve fast enough? Of course not.

Obviously, despite the patent cost crisis, price controls are far from "job one" here. In fact, despite all the circle-dancing and arm-waving, it looks to me like cost control ain't a serious part of this bill at all. It's behind numero uno: insurance profits; numero dos: health sector profits and fees; and numero last but not least in the hearts of googoos everywhere, the humane crusade to cover the uncovered.

Figures don't lie

A nice lapidary exchange today between Doug Henwood and another participant -- let's call him Aquifer -- on lbo-talk:

Henwood : Forcing people to buy shitty insurance from private vendors is outrageous. Subsidizing that is also outrageous. Nice if you're an insco, though.

Aquifer: Then why do they oppose it now?

Henwood: They do? I thought they'd been pretty quiet. They wrote the draft of
the Senate bill, which is pretty much what they're voting on now. Wall
Street seems happy with events: over the last year, Aetna stock is up
40%; United Health, almost 60%; Wellpoint, almost 80%; and Cigna,
100%. All but Aetna are outperforming the S&P, which is up just 50%.

There's something to be said for reading the business section, though I'm too much of a flyweight to do it. Puts me right to sleep.

March 21, 2010

Uncle Sam's IOUs

"For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year.

Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more.

Sounds like a good time to start tapping the nest egg. Too bad the federal government already spent that money over the years on other programs, preferring to borrow from Social Security rather than foreign creditors. In return, the Treasury Department issued a stack of IOUs — in the form of Treasury bonds — which are kept in a nondescript office building just down the street from Parkersburg's municipal offices.

Now the government will have to borrow even more money, much of it abroad, to start paying back the IOUs, and the timing couldn't be worse. The government is projected to post a record $1.5 trillion budget deficit this year, followed by trillion dollar deficits for years to come."

Glory be to mighty Clio and her twists and turns -- this enduring payroll robbery, instigated long ago by Dembot neoliberal daylight felons like the late Daniel Patrick Moynihan, and their oily Repug sideshow wizard collaborators like Alan Greenbriar, may be about to end -- temporarily of course, and more to the point, accompanied by rams' horns and tinkling cymbals from our press lords' minions, as evidenced by the above chiliastic foreboding.

To throw clear light on the matter, here are the words of a moderate, apparently non-hysterical, actually union-sponsored, apologist for the staus quo ante -- as in "ante up" -- of this heisting system, one Monique Morrissey, shown at left:

"The economy has shed eight million jobs, so payroll tax receipts are down 2.5% compared to pre-recession estimates. As a result, Social Security is projected to run a primary deficit—a measure that excludes interest on trust fund assets -- until 2014, when CBO expects the economy will be back at full employment."

So there you have it: we the McJobbled weebles of America, Inc. have this brief three-year-plus interval when maybe we all aren't building the trust fund pyramid ever higher (toward 3.8 trillion) directly out of our own sweat- and boredom-soaked pay streams

And to my delight it also means that ever so briefly, Uncle Satan must borrow everything he does borrow from elsewhere than from the earnings of us wage smurfs, make up the difference between our payroll tax pay-in and SSI's pay-outs, not, as in the recent past, with yet more increases in payroll taxes but with money borrowed from other sources.

The AP barn-burner of a "news article" linked up top is a fabulous example of routine corporate mass-media disinformation. The second link, the response by the unpaid imbecilic system apologist, makes for a nice complementary read, inasmuch as it steadfastly demolishes the AP's horror tale rather nicely -- err, up until it falls into the rabbit hole itself, assumes a sheeplike mein of stupid pious civics-class blockheadish prudent concern, and downright joins the Moynihanite morons' bandwagon ride to abject idiocy. I am not exaggerating.

"This is not to say that the system faces no challenges," Morrissey observes, with a solemn Polonius-like wag of the head. Yes, brothers and sisters, there are right-wing jungle drums and smoke signals, but also neoliberal geek chicken little-ings too, that rotate on this spike.

"Wages for most workers were flat even before the recession hit, Social Security’s finances have been slipping since the system was last in balance in 1983."

That is, the fabled Moynihan moment. Now this is patent bullshit. Where in hell did the $2.5 trillion surplus the system now sports come from?

" The system... needs periodic adjustments to address changes in life expectancy and other long-term trends... "

-- most recent adjustments have been to extend the life span of the system as now constituted...

i.e. improving the outlook without increases in taxes --

"CBO projects that payroll tax receipts will only cover about 80% of promised benefits after the trust fund is drawn down in coming decades. ["Coming decades" as in the decade of... 2040! -- OP]

"To put this in perspective [That's always the bend-over phrase -- OP], future generations will still receive higher benefits, in inflation-adjusted terms, than retirees today because of economic growth."

What's so wrong with that, you say? Just wait!

"Nevertheless... it would be far preferable to raise revenues so promised benefits can be paid in full...This can be achieved by increasing payroll taxes a modest amount (equivalent to 0.5% of GDP)"

There you have it: raise payroll taxes, soon if not now; after all, the sooner the raising the lesser the raise, eh?

Fellow pinks, this amounts to a near-total capitulation to the Black Hundreds of Wall Street. Nothing could be more outrageous than to consider increasing taxes on payroll when they obviously need to be dramatically reduced, and this whole paper tiger masquerade hoiked out of the universe of public discourse like a third-grade spitball.

The only reason Uncle overtaxes payroll and accumulates trust funds is to undertax profits, rents, interest, dividends, etc. What for God's sake is a union stooge doing suggesting -- yes even suggesting -- an increase! -- No matter how modest, how gradual, how long-postponed, how lubricated and softened. Just the thought of it makes me want to fly down to wherever that poor grubbing dolt lives, find her mentors, and and and ...

Okay, okay, I know, honest folks can get gulled, even smart honest folks. After all, the hegemons make us swim in their mischief 24/7. Not all of us have the trust capacity of a rattlesnake, like us Paines. So to uphold the code that has guided my life since 2000 ("fairness and balance at all times; scrupulous generous balanced unflagging fairness"), let me add the author partially recovers her feet with this parting bit of good class arithmetic:

March 23, 2010

Entrism, then and now

Viewing this hideously huge and mutilated brute of a thing I'm reminded of the great William Lloyd Garrison, shown above looking a little like Noam Chomsky around the mouth, and his support for Lincoln and his war.

Recall that Garrison disdained all electoral politics and politicians for 30 years or more -- "I will be as harsh as truth, and as uncompromising as justice". So far as he and his abolition crusade were concerned, the federal system he faced was the slavers' system, plain and simple: a system cursed from its star-chamber conception, from its very genetic code. Indeed, every July 4th -- from some time in the mid-1850's -- ole Bill publicly and conspicuously burned the US constitution in front of a large picnic gathering of righteously reveling "African slavery abolitors".

Garrison even advocated "non-violent secession" as the solution. not electoral circle dancing -- secession of the free states, of course, or any compact grouping of free states (New England, say).

Then after that long and steadfast record of total rejectionism comes his Lincoln moment. Many of his followers and friends quite naturally found it nothing better than a squalid betrayal of his burningly pure ideals, and yet he never wavered, so far as I know, when Clio allowed glorious reform to enter stage right in the person of a giant ape of a railroad lawyer.

This craggy-looking quondam "rep" from the western outlands, this second-rank Illinois pol, probably from the shallowest of opportunist waters... But apparently Garrison knew his man when he saw him; knew him for what he was, and in spite of that, for what he would become. He knew this man, by waging a disgraceful, corrupt and bloody war for "union", would at the same time by steps inevitable liberate the enslaved of the South.

Yes, he favored just letting the South go, at first, but when war came Garrison discarded that stance and plunged willingly, publicly and controversially into the fight, sending a son to join the scrap with a black regiment.

A lesson there somewhere, I think, and one worth much pondering, brothers and sisters.

March 24, 2010

The sages are divided

Owen and I obviously have a very different take on the "health reform" with which Obie & Co. have just presented us. Among his other reasons for seeing the glass half-full, Owen cites the likelihood that at least some people, under the new regime, will get some health care that they wouldn't have gotten otherwise.

Personally, I wonder if this is even true -- whether premiums and copays and caps won't go so high that the net effect on people's health will be negative. But let's say, arguendo, that Owen is right. I still hate it.

Now I don't like to think of myself as a hard-hearted person. But alarm bells go off in my head when I hear arguments like this -- we need to buy, mentally if in no other way, into some corporate-aggrandizement pile-o'-crap like the health "reform" because otherwise, People Will Die. And their deaths, in some obscure way, will be our fault.

It seems a lot like the lesser-evil argument, in fact. Vote for the Democrats -- and ratify their stampede toward war, immiseration, and the police state -- or Even More People Will Die under the other gang's rule.

I used to view this kind of thinking as taking short-term gain even if it means long-term loss. Now that's not an entirely unreasonable thing to do. After all, the loss is tomorrow and therefore conjectural, whereas the gain is today -- or at least, later this afternoon -- and at least somewhat more nearly certain. And who knows, maybe, by tomorrow, the horse will learn to talk. There's a case to be made -- as long as there's a real choice to be made.

But maybe this model -- choosing short-term versus long-term -- doesn't quite fit our case: those of us, I mean, who don't have any actual choices to make, except about what we think, and what we say.

Dennis Kucinich -- recently pilloried here for his cave-in on the "health" bill -- might be able to make this argument. His vote, presumably, made a difference. If he had voted No, and the bill had failed, and if those People Had Died -- if they could really be known to have died on account of his vote -- then maybe he could plausibly tell us that his conscience would be uneasy.

But for those of us in the peanut gallery, it's just empty grandiosity to think that our wonkish twitterings make any difference to the near-term outcome. They don't; and so I'd say we have not only the luxury but the duty to say, "the hell with the near term, if it means further aggrandizement for those thieves in the insurance companies." Nobody will die on account of us telling the truth; so don't we have a duty to tell it? And maybe, just maybe, something one of us says somewhere will open somebody else's eyes a little bit.

But we're certainly not serving enlightenment by spreading yet more gray-vampire "realism": more hopeless, resigned, take-what-crumbs-you-can-get defeatism. That just amounts to apologetics for the Dembo Judas goats who lead us every day a little farther into the abattoir. Its only effect is to drain away people's indignation and whatever impulse they might have to resist.

And that -- our steady progress deeper into the slaughterhouse -- brings me back to the short-term/long-term argument. It's too kind to the Kuciniches, even, I now think -- too kind even to the people who do have some responsibility for outcomes. They ought to be able to see where all this is going. They're not simply in the position of people who have to weigh a conjectural near-term good against a conjectural long-term harm, in a world characterized by stationary probabilistic processes. Rather, they are in the position of people who can see a blatantly obvious project being carried out before their eyes, step by step, and who must choose whether to facilitate it or monkeywrench it, to the best of their ability.

Dennis chose to facilitate it, as far as I can see. So if MInos drops me an email asking for advice about Dennis, I'll tell him, Send the little fuck straight to the hottest patch of burning brimstone you've got.

March 25, 2010

That Ole Folksy Touch

That ole folksy touch, it sure do impress the natives. It gives 'em a sense of being one of the boys. And it helps make up for some of the little jokes.

CIA officers in Afghanistan were so eager to meet the spy they believed would help them crack al-Qaida's leadership they planned a birthday celebration for his visit in December, current and former U.S. officials said.

A birthday cake was waiting.

But before they could even begin to question their golden source, he detonated a powerful bomb, killing himself and seven CIA employees in one of the deadliest attacks in the agency's history.

A birthday cake! Awww, shucks. Was it in a special shape? Maybe a key, to symbolize the opening of hearts and minds?! That could be a mistake, even with the best intentions. I remember baking a key-shaped cake that wound up looking like a penis. From a certain angle, now that I recall, it also looked like Leon Panetta.

A couple of additional curiosities from the article.

Presenting birthday cakes to recruited agents is, according to the cited sources, part of management's human resources policy. It's supposed to add that all important personal touch. There's nothing unusual about it.

The policy makers expect to be warmly regarded, if not actually loved, by people recruited from their pool of victims. They're giving them opportunities. And cakes! Birthday cakes! To question their management of this program is to impute grievous character flaws to the people carrying it out. The policy itself, needless to say, just is. It flew in the window while no one was looking.

The drone attacks, coups, assassinations and so forth don't count as the deadliest attacks in the agency's history.

March 27, 2010

They grind exceeding small

You always like to find an edge where the fabric holding us all in our "one big world" rips apart easily, revealing the scam under the blanket-toss, so to speak. Here's one deluded soul not quite breaking all the way through:

"To be honest, sometimes I feel that I’ve spent most of my adult life knocking down the same misunderstanding, over and over again. I wrote about more or less the same issue more than 20 years ago:

There is a widespread view that world payments imbalances can be remedied through increased demand in surplus countries and reduced demand in deficit countries, without any need for real exchange rate changes. In fact shifts in demand and real exchange rate adjustment are necessary complements, not substitutes."

That's a reaction to Steve Roach -- bigtime bankers' "economist" -- and his Rx for the presently imbalanced global trade and finance system. Seems Steve is opposed to currency adjustments; instead he prescribes some carefully calibrated differential national rates of expansion... Meaning? Well, as an example: 'keep up the stagnation here in Norte America and get back to boomin' over there China way.'

Dr Roach is really just pulling the old Bretton Woods remedy bottles down off the shelf. Way back when -- despite their obvious brutality -- they were at least plausibly "appropriate". In a fixed exchange regime like the globe had for the first 26 years after WWII, if you want to keep the fix in fixed exchange you try absolutely everything before you adjust your rate. Almost "euro zone for everyone," you might say. (Why Bretton Woods blew up is another story, one with Yankee gold in its lining, in fact.)

Why that old paradigm now? Haven't we escaped that confounded booby trap of a system, with all it's expansion- and prosperity-choking bits and bridles? Why act as if the harness is still in place? We got a flexible system today, and have had it for over 35 years, and we know that forex flex is great for macro jobs management.

Look what a good strategic devaluation did for Sweden in the 90's, after a wickedly deep financial crisis threatened to derail the prized Swedish social model. Instead of swallowing hard, like Ireland is doing, Sweden devalued -- massively. Result: a fast robust recovery:

"... the Swedish share of exports in gross domestic product rose from about 27 per cent to 52 per cent today. Previously, that share moved in the range of 20 to 30 per cent. In the past four years alone, this ratio went up by almost 10 percentage points.

The reason for this tectonic structural shift lies almost entirely in the real devaluation of the krona.... After Sweden abandoned the peg against the ecu, the former European basket currency, in 1992, the krona’s effective real exchange rate depreciated by 30.7 per cent compared with today. The real devaluation of the krona provided Swedish export industries – electronics, heavy engineering, cars and trucks, forestry products, among others – with an invaluable boost to their competitiveness. The renaissance of Swedish manufacturing industry is not a tribute to the quality of Swedish management, as it is sometimes claimed in Sweden. It is a real devaluation story first and foremost."

Imagine if Sweden had to pull that off with the limitations that say. Portugal or Ireland face today. Yup, job drought and credit crunch for Inga here:

... so then why inflict needless punishment on the millions out there just like her -- well, maybe not quite like her -- if a simple Swedish adjustment would set the whole ball o' wax back on the prosperity track?

Let 'cui bono' be your guide. There are folks that just happen to like the present pseudo-fixed setup just fine.

Take a look at what are called purchasing power parity(PPP) tables to lay it all out in numbers. These tables compare, at existing exchange rates, one universal basket of products across currencies. After a little grouping and comparing you realize there's an astonishingly clear pattern here, a systematic inter-hemispheric forex tilt; not just a few anomalies, but a full set of exchange rates permanently off kilter in the same way.

Using PPP comparisons, you find -- and this persists through time -- north currencies buy more of the indexed products at existing exchange rates. That is: the dollar at the moment exchanges for 12.5 Mexican pesos. So you's expect that 12.5 pesos would buy about as much rice, or electricity, or soap, as one dollar, right?

Wrong. In fact 12.5 pesos buy a Mexican less soap or whatever than a dollar buys an Amurrican. And this is not a fluky, transitory affair, a matter of hysteresis or stickiness. It's permanent and institutionalized.

The great political economist David Ricardo -- father of us all, in some respects -- long ago was forced to assume no tilt could exist, in order to convince his countrymen to open their harbors to unrestricted foreign trade. Any tilt would automatically disappear. If 12.5 pesos today buys less soap than a dollar, then the exchange rate has to change tomorrow and the peso has to drop relative to the dollar.

If Ricardo faced today's world market he'd have to assume reality away. So what keeps these anomalies in place?

Back to our cui bono: what if that systematic north/south tilt produces vast profits for cross hemisphere traders -- profits that come in and apparently keep on coming in and coming in so long as the tilt shall last. The correction Ricardo made instantaneous is here postponed indefinitely.

Mr PAINE, for The People: At this point, your honor, may I call the cross border corporations to the stand?

[The DEFENDANTS are sworn]

Mr PAINE: Gentlemen, I draw your attention to the present reality outside this courtroom. Is it not true that out there, humble smurf-like Americans today face a brutal bonesnapping nightmare, an endless season of misery where job dearth and debt are mocked by a willful credit drought? And sirs, is it not also true that for you clever grasping souls this present utterly contrived stagnation is well... you know... from where you sit... a most necessary and indeed salutary part of the best of all possible games on the planet?

The DEFENDANTS: You don't understand... it's not that simple --

Mr PAINE: A simple yes or no will suffice.

The DEFENDANTS: Err... ummm... yes.

Crowd grows restless, there is the sound of the gavel as we fade to black....

* * * * *

We began with a quote from that national treasure in a pocket protector, Paul Krugman. Once more, with feeling:

"There is a widespread view that world payments imbalances can be remedied through increased demand in surplus countries and reduced demand in deficit countries, without any need for real exchange rate changes. In fact shifts in demand and real exchange rate adjustment are necessary complements, not substitutes."

Yet -- amazing! --

"Sometimes I feel that I’ve spent most of my adult life knocking down the same misunderstanding, over and over again."

Despite Krug's efforts to enlighten them, guys like ole Steve Roach here appear to dwell in the dark ages of the science. How odd.

Krug never wonders whether this might be a mask Roach wears. With all his brightness and probing self-confident merit-badge boy wonder's curiosity, Krugman just can't quite poke his finger all the way through the seam here, and ask, Cui bono?

So he can't figure out why this nonsense persists: Why don't they grasp what's at stake? Why this persistent stubborn -- willful almost -- inability to see the need for currency devaluation and revaluation? Why, how else can you restore global trade balance? Why do those overpaid monkeys, those goddam PTB quack Merlins, even after all the formal models we've built to the contrary these last 35 years -- why why why do they still crave a more or less Bretton Woods-y straitjacket(*)?

Unlike Paul, we dumbclucks here at SMBIVA -- some of us at least -- know why they persist in their know-nothingness. O Paul! Behold the secret motor of globalization, the gigantic hypergizmological global money market casino. Behold the forex rigs imperious that sustain the fabulous transoceanic profit slurry, as it runsmiraculously and perpetually uphill from the economic south to the economic north.

* * * * *

To get a gander at the Atlas under this apparatus, imagine that post war international trade operated a two track game. On one track. the system was building one big market earth by knocking down all sorts of official trade barriers. But on another track just as fast as the old state-erected barriers came down, the MNCs, by way of various shadowy moves, scooped up the proceeds that formerly would have gone into tariff revenue and higher prices and protected domestic firms' profits. Forex fiddlin' played a star role in facilitating this stealthy extraction by the MNCs, and gave us a rigid irrational global welfare-reducing non-adjusting devil's own brew of exchange rates -- the apparently paradoxical prize product of all the free-trade one-worldism ballyhoo.

It's been operating in one way or another ever since Clement Attlee had his family jewels removed in '46, and give or take a few easy topological contortions, it still looks today pretty much as it did back then.

Oh there's more ways than this to peel the world, of course; many, many more ways; and the MNCs use 'em all. But this gimmick here, the big tilt at the main tables, is the deepest chamber in the soul of market earth.

-----------------

(*) Without, of course, the dollar tie to gold, Nixon the Great and Terrible be praised.

March 29, 2010

Hold hands and sing Frumbaya

An energetic hack goes off message and gets canned for it. In other news, water often runs downhill. Frum's firing from AEI isn't a sign of impending discursive doom, there is no harm to the body politic (poor suffering thing that is) nor are there any far-reaching implications. Frum was hired with a certain understanding in place. At his level in the perception management racket the understanding doesn't need to be spelled out. He went off message. It cost him his job. End of story.

I think I can be forgiven for giggling at the thought of his sacking being indicative of "conservative intellectual bankruptcy". We still have Wendell Berry, Daniel Larison and the estimable Old Right anti-imperialists at Antiwar.com. Surely they count for something. Moreover, even a slight familiarity with their writing would suggest that Frum is not a conservative. Although he might "self-identify" as one. But how much is that worth?

The upset over his insignificant, if ignominious, dismissal looks based on the principle that a harm to one hack is a harm to all. That's a good thing, if it comes to pass, not a cause for mourning. I fully favor heightened message discipline and severe penalties for transgressions. Maybe they'll all go on strike in response.

Pseudo-science takes on irrational exuberance

Despite the hat and chin music, or maybe because of the hat and chin music, I love this guy. He's Robert Trivers, the author of several nice models of mother nature, blind altruist. And in addition to these landmarks in the advent of the goo-goo apes, doc Trivers also has some nice stuff to say about the sprinkle of really keen self-deceivers among us.

A delight in self-deceivers of the charismatically-doomed variety has traveled close to my heart ever since aquainting myself with Ahab, that mad manic visionary vengeful skipper, and his chosen cetacean.

See, there's no question, no question whatsoever, about the power of self-deception as Trivers demonstrates with analytic clarity. Among other things, it's the key to leadership on Wall Street, and here's not a bad application of this Trivers theorem to the recent credit market dust up.

"Between a CEO who is consciously trying to maximise the free lunch and a CEO who genuinely believes that a highly levered balance sheet of “safe” assets is the best strategy, who is likely to be more convincing to his shareholders and regulator? Bob Trivers’ work shows that it is the latter. Bankers who drink their own Kool-Aid are more likely to convince their bosses, shareholders or regulators that there is nothing to worry about. Given a sufficiently strong selective mechanism...it is inevitable
that such bankers would end up being the norm rather than the exception. The real deviation from the moral hazard explanation would be if it were any other way!"

Ahh, self-igniting and soaring on your own fumes -- now that's the vida loca supreme, mates! And if you can bring a herd of lawless resolutes along, nearly as crazed as yourself -- so much the better. Numbers make for a far more sublime and resonantly catastrophic finale. I cherish that suddden burst of full realization of his folly.
As the horn of doom sounds in the background, the CEO, coat hurled to the side, charges toward a buy option: "If this is it -- if this is the big one, boys -- I'm goin' down fully vested!"

March 30, 2010

Euthanasia of the publisher

On the open-access, anti-intellectual-monopoly front, note this blog post by a favorite of mine, Rajiv Sethi:

"Theoretical Economics is among the most prestigious journals specializing in economic theory, with a stellar editorial board and high quality submissions. It is also an open access journal: every published article may be viewed, downloaded and printed freely worldwide without subscription. And authors release their work under a creative commons license that allows users to "copy, distribute and transmit" the work provided that this is done with proper attribution, in the "manner specified by the author."

"Under the open access format the size of the user pool (and the aggregate consumers' surplus) is maximized, but none of the benefits that accrue to readers can be appropriated by publishers. This would ordinarily make financial viability difficult. But in the case of journal articles there is very little value added by the publisher in any case:... the lion's share of the product's value is created by authors, referees and editors for little or no direct financial compensation. As a result, relatively modest fees for submission or the processing of accepted papers can be enough to cover the costs of production and online dissemination.... non-commercial... e-journal Economics... uses an innovative public review process involving a large community of registered readers.

So far, the major academic publishers have managed to maintain their lucrative subscription based model... libraries will be increasingly reluctant to pay for bundled journal subscriptions when much of the content could be accessed freely in any case. More importantly, when given a choice, authors will surely prefer retention of copyright, avoidance of exorbitant fees, and the broadest possible dissemination of their work.

Accordingly, if some of the major economic societies and associations make the transition to open access, the floodgates will open. Traditional publishers will find themselves in a pincer like grip, with highly prestigious society journals weighing down upon them and new entrants nipping at their heels.... "

My take is simple: any academic economics association that won't go over to one of these new open access journal formats has... well... a painted ass on its face and ought to be resigned from forthwith.

Rajiv adds:

"The proliferation of blogs is leading to a democratization of discourse in economics, as non-specialists and autodidacts bring fresh perspectives to bear on theoretical disputes and policy questions. This process depends critically on the ability of outsiders to eavesdrop easily on conversations among economists. Unfettered access to academic research not only increases the visibility of ideas, it also increases the scrutiny to which they are subjected. And this should result in the development of better, more interesting, and more robust ideas in the long run."

March 31, 2010

Oil you can eat buffet

The Drunk Pundit has some appropriately derisive words for Obama and the liberal version of the "drill, baby, drill" loons.

My question regarding this is, if they plan to drill in the north eastern seaboard region where do they plan to refine it? If I may, I'd like to suggest anywhere within an hour or two's drive of any or all of the following: Hyannis Port, Martha's Vineyeard, Cape Cod, Kennebunkport, Westport and Montauk. New Jersey is already sufficiently blighted. Although Cape May holds some promise.

I think this idiot scheme of his is going to run into well-heeled NIMBYism pretty quick. But we'll see.

A little update. I see via Corrente that the plan includes the "northern tip of Delaware to the central coast of Florida", and specifically excludes eminent domain seizure of the Kennedy compound.